Numbers UCITs sector 3rd quarter 2020

The capital gains generated by underlying assets during the second and third quarters sharply contrasted with the losses recorded in the first quarter of 2020 due to the impact of the Covid-19 pandemic on the global economy and financial markets.

By the end of September 2020, the net assets of funds publicly distributed in Belgium amounted to 216.6 billion EUR. During the second and third quarters combined, nearly 90% of the losses incurred during the first quarter of 2020 due to the impact of the Covid-19 pandemic were recovered.

The net assets of funds primarily investing in fixed-income securities increased by 2.7% during the third quarter of 2020, while the net assets of funds primarily investing in non-fixed income securities, such as mixed funds and equity funds, rose by 3.9% during this period.

Within the category of mixed funds, pension savings funds saw an increase of 0.6 billion EUR during the period from July to September 2020. Equity funds experienced the largest absolute increase in their net assets during the third quarter, while bond funds saw the largest relative increase during this period.

Fourth Quarter 2020 Forecast

Preliminary indications for the fourth quarter of 2020 still suggest a continued recovery of the net assets of the Belgian fund sector.

BEAMA's research shows that the net assets of publicly marketed funds in Belgium increased by 7.6 billion EUR, or 3.6%, during the third quarter of 2020. As a result, publicly marketed funds in Belgium represented 216.6 billion EUR by the end of September 2020.

The increase in the Belgian fund market during the period from July to September 2020 is primarily explained by positive market developments that occurred during this period as a response to the recovery of financial markets. This recovery followed the decline that occurred in the first quarter of 2020 due to the Covid-19 pandemic.

The positive market developments during the second and third quarters led to a recovery of the underlying assets of the funds, allowing them to recover almost 90% of the losses incurred during the period from January to March 2020.

Preliminary indications available to BEAMA for the fourth quarter of 2020 suggest a continued recovery of the net assets of the Belgian fund sector.

The Belgian fund market continued its recovery during the third quarter of 2020, recuperating a further portion of the losses incurred during the first quarter of 2020 due to the Covid-19 pandemic. Additionally, investors maintained their confidence in the Belgian fund market.

Funds Primarily Investing in Fixed-Income Securities

Within the group of funds primarily investing in fixed-income securities, the assets of publicly marketed bond funds in Belgium increased by 3.6 billion EUR, or 9.2%, during the third quarter of 2020, bringing their total to 42.9 billion EUR by the end of September 2020. Bond funds had already recorded higher net assets in mid-2020 than at the end of 2019 (pre-Covid-19), and this amount continued to grow during the third quarter.

The increase is mainly attributed to a 55% gain from capital gains on underlying assets and a 45% contribution from net subscriptions.

Net assets of monetary or money market funds declined by 2.4 billion EUR, or 30.2%, during the period from July to September 2020. This decline is primarily a result of technical adjustments in the portfolios of mixed asset funds. Given the positive market movements during the second and third quarters of 2020, asset managers of mixed asset funds partially shifted their stable monetary funds to bond funds and more volatile equity funds to take advantage of the recovery in financial markets. In other words, the technique of bottom protection was partially abandoned by mixed asset funds due to the recovery in financial markets.

Funds Primarily Investing in Non-Fixed Income Securities

Within the group of funds primarily investing in non-fixed income securities (such as equity funds), except for capital-protected funds, only rising trends were recorded during the third quarter of 2020. These increases are attributed to a 50% gain from capital gains on underlying assets and 50% from net subscriptions.

The assets in Belgium of equity funds increased by 5.0 billion EUR, or 8.9%, during the period from July to September 2020. Of this increase, 60% is attributed to capital gains on underlying assets and 40% to net subscriptions. By the end of September 2020, the assets of equity funds amounted to 61.2 billion EUR, which is still 4.6 billion EUR below their level at the end of 2019 (pre-Covid-19).

The category of mixed funds (including pension savings funds) saw an increase of 0.7 billion EUR, or 0.7%, during the third quarter of 2020. This increase is mainly attributed to net subscriptions. Consequently, the marketed assets of mixed funds reached 102.3 billion EUR by the end of September 2020, which is 3.3 billion EUR below their level at the end of 2019 (pre-Covid-19).

Mixed funds have seen increasing success in recent years, and since 2015, they have become the largest asset class. Due to their active asset allocation, mixed funds are highly suitable for implementing a risk diversification policy in the context of MiFID II, making them well-suited for aligning the product with clients' risk profiles.

Within the category of mixed funds, pension savings funds saw an increase during the third quarter of 2020, amounting to 0.6 billion EUR or 2.8%. By the end of September 2020, pension savings funds represented net assets of 20.7 billion EUR. This places pension savings funds 0.6 billion EUR below their "all-time high" marketed assets at the end of 2019.

During the third quarter of 2020, pension savings funds recorded net subscriptions amounting to 150 million EUR.

Funds with Capital Protection saw a decline of 0.3 billion EUR during the third quarter of 2020 and had assets of 3.5 billion EUR by the end of September 2020. This decrease is primarily due to net redemptions.

Publicly distributed funds under Belgian law

As of the end of September 2020, publicly distributed funds under Belgian law had a total managed net asset value of 158.1 billion EUR. At that time, pension savings funds represented 20.7 billion EUR within this total, accounting for more than 1/8th of publicly distributed funds under Belgian law.

The calculation of the average annual return of pension savings funds as of September 30, 2020, yields the following results:

BEAMA has developed a dashboard regarding pension savings funds, which is attached as an appendix to this press release. Thanks to this dashboard, key figures related to third-pillar pension savings funds and their evolution are visually presented in a concise manner on a quarterly basis.

Non-publicly distributed institutional funds under Belgian law

Since the implementing Royal Decrees were published in the Belgian Official Gazette on December 18, 2007, investment vehicles tailored to institutional investors can be developed in the form of "Institutional ICB with a variable number of units." These institutional funds are non-public funds that must be registered with the Federal Public Service (FPS) Finance.

These institutional funds should not be confused with publicly distributed funds with non-retail share classes, which are registered with the Financial Services and Markets Authority (FSMA).

As of the end of September 2020, the 137 institutional compartments under Belgian law represented 16.3 billion EUR in net assets. These funds attract many institutional investors, contributing to the depth of institutional markets in terms of financial assets and pension formation.